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International Flavors’ Short Interest in a Volatile Environment

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IFF’s short interest

Based on the latest short interest report on March 15, 2018, International Flavors & Fragrances’ short interest has fallen since the beginning of 2018. The decline in short interest indicates that bearishness in the stock has declined.

IFF’s short interest as a percentage of its outstanding shares fell from 1.3% on December 29, 2017, to 1.2% on March 15, 2018. However, IFF stock also fell 9.3% for the same period.

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IFF reported better-than-expected 4Q17 earnings. It reported revenue growth of ~12.1% and adjusted EPS (earnings per share) of $1.40, representing a growth of 14.8% on a year-over-year basis. IFF expects organic growth to drive its revenues, while cost and productivity initiatives along with share repurchases could boost its adjusted EPS growth. These positive views have resulted in a decline in its short interest.

Peer comparisons

IFF’s short interest is 975,000 shares, and its average trading volume is 428,000 shares. As a result, its interest ratio is 2.3x, which indicates that it would take two days to cover all short positions in IFF. Let’s take a look at its peers:

  • Sensient Technologies’ (SXT) short interest is 1.9 million shares with an average number of shares traded at 356,000. Its short interest ratio is 5.4x, indicating that it would take five days to cover its short positions.
  • Clorox’s (CLX) short interest ratio is 6.3x, which means it would take six days to cover its short positions.
  • Estée Lauder’s (EL) short interest ratio is 3.3x, suggesting that it would take three days to cover its short positions.

Investors can indirectly hold IFF through the First Trust Horizon Managed Volatility Domestic ETF (HUSV), which has invested 1.9% of its portfolio in IFF as of March 26, 2018.

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